On 7 May 2021, the Directorate General of Trade Remedies (‘DGTR’) concluded the anti-dumping investigation concerning imports of ‘Plain Medium Density Fibre Board having thickness 6mm and above’ (‘subject goods’) produced by Kim Tin MDF Joint Stock Company, Vietnam (‘Kim Tin’) by terminating the investigation. Though the termination of this investigation is not unusual, the reasons for the termination of the investigation are interesting. The DGTR terminated the investigation for the reason that the purpose would be served by undertaking a review rather than conducting a fresh investigation, as was done in this case.
Before discussing the DGTR’s termination order, since the subject investigation is connected to the original anti-dumping investigation on imports of the subject goods from Vietnam, it would be relevant to first provide a brief background of this previous investigation.
Background of the previous anti-dumping investigation
Subsequent to an application filed by the domestic industry, the DGTR initiated an original anti-dumping investigation concerning imports of the subject goods from Indonesia and Vietnam on 7 May 2015 (‘original investigation’). By Final Findings dated 5 May 2016, the DGTR recommended the imposition of definitive anti-dumping duty (‘ADD’) on imports of the subject goods from these countries.
Kim Tin MDF Joint Stock Company was a producer/exporter of the subject goods from Vietnam which had participated in the original investigation. On examining Kim Tin’s data, the DGTR had determined that the dumping margin of this party was de-minimis. Accordingly, the DGTR recommended ‘nil’ anti-dumping duty in respect of Kim Tin. However, it is important to note that the DGTR had not terminated the original investigation against this party.
Subsequent to the DGTR’s recommendations, the Ministry of Finance vide Notification No. 34/2016-Customs (ADD), dated 14 July 2016 imposed definitive ADD on imports of the subject goods from Indonesia and Vietnam as per the rates recommended by the DGTR. The ADD is effective till 13 July 2021.
At a later date, aggrieved by alleged dumping of subject goods produced by Kim Tin, the domestic industry filed an original anti-dumping application with the DGTR. In their application, the domestic industry requested for imposition of ADD on the imports of the subject goods produced by Kim Tin. Subsequent to this application, the DGTR initiated a separate original anti-dumping investigation only to investigate Kim Tin’s transactions vide Notification dated 11 May 2020. It is important to note that the subject investigation was initiated under Rule 5 of the Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 (‘AD Rules’), which pertains to initiation of original investigations.
During the investigation, Kim Tin vehemently objected to the maintainability of the subject investigation being initiated under Rule 5 of the AD Rules. Kim Tin contended that since the previous original investigation against it was not terminated, only a review investigation against under Rule 23 could be initiated and not an original investigation.
The domestic industry on the other hand contended, inter alia, that as per decisions of the WTO panels in Mexico-Beef and Rice and Ukraine-Ammonium Nitrate, the investigation against Kim Tin stood terminated. Therefore, only an original investigation could be initiated against Kim Tin. The domestic industry also cited the practice in other countries such as the European Union where the investigation against parties having de-minimis dumping margins was terminated.
After considering all the arguments, the DGTR held that the investigation against Kim Tin was not terminated in the previous investigation. The DGTR further observed that its practice is of assigning ‘nil’ anti-dumping duty to such party having de-minimis dumping margin. Further, the DGTR referred to the CESTAT’s decision in Robin Resources v. Union of India, [2016 (342) E.L.T. 118 (Tri. - Del.)] which upheld such practice of the DGTR. On this basis, the DGTR concluded that the subject investigation could not be conducted as an original investigation under Rule 5 but only as a review investigation under Rule 23. Accordingly, the DGTR terminated the subject investigation vide its Termination Order dated 7th May 2021.
However, interestingly, at para 3 of the Initiation Notification of the subject investigation, the DGTR had noted that the original investigation against Kim Tin was terminated since its dumping margin was determined to be de-minimis. The DGTR had at the initiation stage stated that it did not consider it appropriate to initiate a review investigation against Kim Tin. Effectively, the DGTR has overturned its observation in the Initiation Notification vide its Termination Order.
De minimis who? country or producer?
The key issue is whether an investigation initiated against a party having de-minimis dumping margin is to be terminated. Reference is made to Rule 14(c) of the AD Rules, which provides for immediate termination of an investigation in a scenario where, inter alia, it determines that the dumping margin is less than two per cent of the export price.
It may be noted that Rule 14 is based on the second sentence of Article 5.8 of the WTO’s Anti-Dumping Agreement (‘AD Agreement’) which states that: “There shall be immediate termination in cases where the authorities determine that the margin of dumping is de-minimis, or that the volume of dumped imports, actual or potential, or the injury, is negligible.”
While both the AD Agreement and the AD Rules require the immediate termination of an investigation where the dumping margin is found to be de-minimis, both texts are silent as to whether the finding of de-minimis margin has to be in respect of the subject country being investigated or in respect of the particular producer, or both.
WTO jurisprudence on the subject is clear. Panel decisions such as in Mexico-Beef and Rice and Ukraine-Ammonium Nitrate have very clearly held that investigations where a de-minimis dumping margin is determined in respect of an individual party will have to be terminated immediately. However, practice across different WTO members is different.
In India, it is the consistent practice of the DGTR not to terminate investigations against a party but instead assign a ‘nil’ duty against such party having de-minimis dumping margin. Some of these investigations are Electronic Calculator from China PR[1], 2-Ethyl Hexanol from EU, Indonesia, Korea RP, Malaysia, Taiwan and USA[2], Caustic Soda from China PR and Korea RP[3]. The European Commission in investigations such as Stainless Steel Cold-Rolled Flat Rolled Products from the People’s Republic of China and Taiwan[4] and Certain Stainless-steel Tube and Pipe Butt-Welding Fittings, whether or not finished, from the People’s Republic of China and Taiwan[5] and the Turkish investigating authority have also followed the same practice[6].
Conclusion
The DGTR in the instant investigation has not treated de-minimis dumping margin as termination of investigation against Kim Tin. It is also pertinent to note that DGTR in the Final Findings dated 5 May 2016 of the original investigation had not terminated the investigation against Kim Tin. This clearly demonstrates that the DGTR has followed its consistent practice. Thus, the domestic industry had the option of filing a review application under Rule 23 for either a mid-term review or a sunset review if the existing ADD were due to expire.
It is pertinent to note the jurisprudence in Robin Resources where the CESTAT has held as under:
- We note that the DA can consider where an exporter was awarded zero duty in the original investigation and has now found to be dumping which is likely the cause injury to DI, then AD Duty can be considered for imposition with reference to dumping margin and injury margin established during the review. We note that the DA followed the requirements of Articles 2 and 3 of the ADA and the relevant provisions of AD Rules. We also note that regarding appellants, the DA has examined and reviewed all the aspects of original investigation and in addition examined whether expiry of initial notification is likely to lead a recurrence of dumping/injury to the DI. As already noted that this is like a fresh investigation insofar as appellant is concerned and we find no legal infirmity in such action by the DA.”
(emphasis supplied)
Though an appeal is pending against the CESTAT’s Order in Robin Resources before the Supreme Court, the CESTAT’s Order has not been stayed, and hence remains good law.
The DGTR’s Termination Order makes it clear that there where de-minimis margin has been determined against a particular party, the proper procedure is to seek a review under Rule 23 and not an original investigation under Rule 5.
This order also supports the understanding that invocation of Rule 14(c) of the AD Rules for termination of an investigation where a de-minimis dumping margin is determined, does not pertain to an individual party but a country which is under investigation, at least as far as India is concerned. Further, in no case has the DGTR terminated an investigation only in respect of an individual party where a de-minimis dumping margin has been determined for such party.
[The author is an Associate in WTO and International Trade practice team at Lakshmikumaran & Sridharan Attorneys, New Delhi]
[1] Original final finding dated 13 April 2015 issued vide Notification No. 14/19/2013-DGAD and Sunset review finding dated 26 March 2020 issued vide Notification No. 7/15/2019-DGTR.
[2] Original final finding dated 18 February 2016 issued vide Notification No. 14/24/2014-DGAD and Sunset review finding dated 8 March 2021 issued vide Notification No. 7/28/2020-DGTR.
[3] Original final finding dated 4 August 2003 issued vide Notification No. 14/10/2002-DGAD; 1st Sunset review finding dated 21 November 2008 issued vide Notification No. 15/11/2007-DGAD; 2nd Sunset review finding dated 18 June, 2015 issued vide Notification No. 15/23/2013-DGAD and 3rd Sunset review finding dated 29 October, 2020 issued vide Notification No. 7/1/2020-DGTR.
[4] Commission Implementing Regulation (EU) 2015/1429 of 26 August 2015
[5] Commission Implementing Regulation (EU) 2017/141 of 26 January 2017
[6] Notification on the prevention of unjust competition in imports (Notification No. 2019/36).
